Think Again, Finmin!

Govt’s reported move to replace Gokarn as RBI Dy Governor will be seen as a move to punish independent thinking

According to news reports the Reserve Bank of India (RBI) is set to have a new Deputy Governor in place of Dr Subir Gokarn whose term expires today. This is most unfortunate. Rightly or wrongly, Gokaran is seen as the man who, as the Dy Governor in charge of the monetary policy division of the Bank, was the person who (rightly) stood his ground and opposed the finance ministry’s short-sighted efforts to keep interest rates suppressed artificially.

At a time when the government is battling a severe crisis of credibility on almost every front, the last thing it should be looking for is one more reason for people to look askance at its motives. Consider. Economic growth has slowed to a ten-year low, the RBI governor is into the last year of his term (which ends in September 2013) and inflation (consumer price inflation) is hovering near double digits.

The unstated message to any new man or woman in the job is clear: You oppose the political dispensation of the day at your peril. So much for the RBI’s hard-won de-facto independence!

All right-thinking people would agree this is not the time to rock the boat and go in for a change of guard. But then where are the right-thinking people in the government?